Reliance Mutual Fund launches Index Fund

ECONOMICTIMES.COMSep 9, 2010, 12.54pm IST

New Delhi: Reliance Mutual Fund (RMF) on Thursday announced the launch of Reliance Index Fund, an open-ended index linked scheme which will invest in companies whose securities are covered in Nifty and Sensex.

"Reliance Index Fund provides investors an opportunity to participate in India's growth story by investing in well-diversified portfolio of fundamentally strong, highly liquid and well-known companies. We have decided not to charge any AMC fees for this fund in our effort towards financial inclusion and to make this product more attractive for our investors - especially in smaller cities or first time investors who have not participated in the success of capital markets in India" said Sundeep Sikka, CEO, Reliance Capital Asset Management.

The fund is a conservative large cap oriented index linked fund with an objective to mirror the target index - Nifty/Sensex - so as to commensurate with the performance of the underlying Index, subject to tracking errors. The fund will be passively managed.

Investors will not be charged any AMC fees for this fund, perhaps the first fund not to charge any AMC fees till date. However, investors will be notified about any change in this fee structure, if proposed in future, on the company's website at least three months in advance.

The scheme proposes to invest 95-100 per cent in equities and equity- related securities covered by Nifty and Sensex. The scheme has both growth and dividend option. The minimum investment amount is Rs 5,000 and in multiples of Re 1 thereafter.

Entry load is nil for the scheme, as per SEBI's guidelines, whereas the exit load is 1 per cent for holding period of upto 12 months and Nil thereafter. Dividend payout feature will also be provided with quarterly, half-yearly and annual dividend frequencies.

"These unique features - like no AMC fees and regular dividend payout -- make the fund an ideal entry point for the mass retail investors and should be a part of every portfolio," said Mr Sikka. The NFO would be open from September 9 and closes on September 23, 2010.